Beer Distribution Problems Brewing

LAKELAND, Fla., Jan. 26 /PRNewswire/ -- It's a safe bet that when you're sitting on your patio deck enjoying a cold Bud, you don't give much thought to how it went from St. Louis to your local liquor store. But for the nation's 1,500 breweries, 2,800 beer distributors, and approximately 530,000 retail businesses that sell beer, it's a time-honored route laden with checks and balances.

Known as the three-tier system, a brewer can only sell beer to a state-licensed distributor, who can only sell to a state-licensed retailer, who can only sell to an adult consumer of legal drinking age. But of the three tiers, none has been affected more, or seen the way they do businesses drastically altered over the past 30 years, than the beer distributor.

Decades ago, the beer distribution industry was somewhat of a cookie-cutter operation. Back then there were fewer than 100 brewers pumping out suds in mostly standard-sized bottles and cans that were shipped by distributors in full pallets.

Then, in the Eighties, the game changed.

"In the early Eighties, we were dealing with mostly full and half-pallets, and less than 100 SKUs," recalls Joey Lopez, VP of Operations for Cone Distributing, Inc., which operates two warehouses servicing 11 counties in Central and Northern Florida. "But then Coors started the regional beer boom in the mid-1980s, and things started to change. Now, we are dealing with over 600 SKUs."

The proliferation of microbreweries, or "craft brewers," has greatly affected the beer distribution industry, says Eric Criss, President of the Florida Beer Institute.

As the number of SKUs increases, the need for automation becomes more and more of a factor in an industry historically reluctant to change. But with some high-volume distributors now pushing out upwards of 100,000 cases of beer per day, a number that is capable of increasing by as much as 25% during the high-peak seasons, that reluctance may become a requirement. Eric Criss thinks that warehouse automation in beer distributors has to happen to keep up with consumer demand for a wider selection of products. "Distribution centers will have to rely more and more on automation as the number of SKUs continues to increase," says Criss.